H.J. Huneycutt

Dow 30 Overbought / Oversold Edition

This is a completely useless article --- it's just some bars and some completely meaningless metrics. There are absolutely no explanations.

In fact, this article appears to be an advertisement for the author's product ("one of our most closely followed customizable products"). Not sure why anyone would be willing to waste their money on this; any moron can look at a chart and see whether a stock's being going up or down over a certain time frame. The author's comment that many of these stocks are trading near their "theoretical highs" exposes how completely useless most technical analysis is.

Discover Financial: An Average Company at a Great Price?

That's interesting. Potential bankruptcy reform was one of the things mentioned frequently in Discover's latest earnings call. Credit card companies are left holding the bag when there are bankruptcy filings, but as you mentioned, Discover tends to offer smaller credit lines than the others. Also, as I mentioned in my article, the market seems to have factored a very high rate of delinquincies into the price already.


On Apr 10 11:07 AM Wide Moat Investing wrote:

> Here's a data point...
>
> "Roy Terry, a bankruptcy attorney at Durrette Bradshaw and a trustee
> for the bankruptcy court, said his trustee schedule is twice as busy
> as it was a few months ago. He said individuals declaring bankruptcy
> are often facing stiff credit card bills. One filer had $300,000
> in credit card debt, he said. Most of those who are filing have $20,000
> or $30,000 in credit card debt."
>
> www.richmondbizsense.c.../

The Great Visa Debate: Refuting H.J. Huneycutt

It's good to have a little bit of a rivalry ;)

Good article! Though, I would've liked to have seen more to address my major issue --- that Visa's stock has too high built-in expectations to provide a favorable risk-reward proposition. I think we're largely in agreement on the actual business prospects. My only real concern is valuation.

Visa: Not Everywhere I Want to Be

31October,

I'd agree about DFS's insider selling. That's one of my concerns with them.

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Eric in IL,

My point with Microsoft is that back in 1998, people thought they were invincible forever. It's true that MSFT had a tremedous moat. 11 years later, they still have a good moat, but it's getting weakened now. 10 years from now, I wouldn't be surprised to see a landscape that is not nearly as favorable to them.

The point I'm driving at is this --- Visa is priced for perfection based on the premise that they will continue to grow at an extravagent rate for decades to come. However, it's really difficult to forecast 10, 20, or 30 years down the road and there's no reason why you couldn't see the environment change dramatically by 2020. Things change and even if no one forsees huge obstacles right now, that doesn't mean that there won't be any further off into the horizon.

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Larry,

I admittedly haven't examined AXP in any detail, but I've never liked their basic business model. They have established themselves as a "luxury card" of sorts and I can't fathom any reason why I'd want to own a "luxury card". Nor do I know why I'd want to pay a high yearly fee for the "priviledge" of something that I could find elsewhere for free. Maybe I'm shortchanging AmEx based on my own observations as a consumer, though.

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RiskReturnOptimizer,

Great comment. I actually wouldn't be surprised if Visa continues an upward trend for awhile. I think the market is being irrational on it and could continue to be irrational on it for at least a year if not longer. Long-term (as in 2-10 years), I think the negatives outweight the positives at the current price, but good strategy all the same.

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Ozcutty2,

I have no faith in my ability to time the market. Since I have a long-term outlook (2-10 years), I merely go by what looks good from a risk-reward perspective based on the fundamentals and price. DFS probably won't take off soon, but I think long-term, it could turn out to be a great buy.

Fed Needs to Stop Approving (Goofy) Bank Holding Companies

Great article. I've not been too fond of these movements of non-banks to position themselves for TARP funds, either.

Long Visa: Not All Credit Card Companies Are Created Equal

Just took a quick glance at Visa's balance sheet and I'm not sure I'd share your somewhat rosy assessment of it. For one, once you discount Goodwill and Intangible Assets, Visa basically has 0 equity. That should debunk some of the stuff about its lower leverage.

Of course, V could still prove to be a good investment, but it's certainly not because of a strong balance sheet. Discover's B/S looks vastly better to me.

Long Visa: Not All Credit Card Companies Are Created Equal

Interesting article. I'll have to look into V.

Fwiw, I don't think DFS is a bad buy right now, either. Even if they do take on greater risks, the stock would appear to have an astronomically high default rate (15%+) already factored into the price. They have the cash and equity to absorb very substantial losses.

Credit Card Crunch: Creating a New Generation of Subprime

Credit card earnings will suffer as deliniquencies increase, but this article ignores the fact that the market has priced (arguably overpriced) most of that in right now. Discover (DFS) is a deal in the $6 - 7 range. I might even buy it in real life if it were to dip down to the $4 or $5 mark.

A Buy & Hold Forever Dividend Stock Portfolio

Honestly, I think buying into an index fund forever would be wiser, but it would be interesting to see your returns on this in 5 and 10 years.